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MGN Asset Management Can Teach You Valuable Investing Lesson

MGN-Asset-Management-logoBelgian forex social trader MGN Asset Management´s story can teach you and many other social investors, followers or copiers one important and valuable lesson.

Here is his story:

Trading performance of this forex signal provider was so good (91% of his trades were winners) that it took him only 19 weeks to become a top forex trader on social investment network Zulutrade.

New investors were joining and following him very quickly and everything looked bright and sunny. However, there were some warning signs that a disaster will happen sooner or later. (Which signs?…read my article from that time: Is MGN Asset Management´s Fate Same As That Of Kama-Spot, Forex Cruise Control Or Other Former #1 Signal Providers?)

How is this trader doing today?

I would say, not very well. Just check a screenshot below.

MGN-Asset-Management-chart

He used to be more than 36,000 pips in profit in september 2014.  In that time, Euro was in a very strong uptrend against US dollar. So he opened a BUY position. But as you may have noticed, since then EUR/USD uptrend changed to a downtrend. MGN Asset Management´s trading strategy in these cases was to add a new BUY position to average down the cost. But as the strong trend against him continued, he was adding more and more BUY positions (up to max. 30 allowed by Zulutrade).

MGN-Asset-Management-open-trades
(On my laptop, I wasn´t even able to take a full screenshot of his 30 open positions)

What was the result of this trading behaviour?

His 30 open positions reached 80,000 pips drawdown! Size of that drawdown was more than twice bigger than his total profit.  At the time of posting this article, his current drawdown is – 69,291 pips)

I promised you one valuable lesson. Here it is:

Before you follow and copy any signal provider (it doesn´t matter if he is #1 in the ranking), do your homework and analyze his trading style and behaviour.  Adding new positions to those that are already in loss is one big warning sign. MGN Asset Management is just one example how it can end.
There are many more signal providers who ended in the same way. (Actually, I launched Zulutrade Martingale Long Term Challenge to find out if there is any signal provider who can be profitable with this kind of strategy long term. Results might surprise you).

So if you consider copying any trader with this trading style, think twice before you do so.

Adding positions is only one of many warning signs you need to know before you can evaluate any signal provider´s behaviour. ForexSocialTraders.com brings you Zulutrade Follower Academy where you can learn those signs and you get even more useful information so you can become a profitable follower and copier.

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